SKIPSFARTENS KLIMAGASSUTSLIPPOG

MULIGE REGULERINGSMODELLER

Terje C. Gløersen

Norges Rederiforbund

Startseminar NIFS-sjøsikkerhetsprosjekt

Lysebu, 28.-29. januar 2008

OVERVIEW

The problem and the challenge

Marine bunker consumption and emissions from shipping – past, present and future

CO2-efficiency of shipping and the reduction potential

The regulatory process – international and regional

Conclusions

THE PROBLEM AND THE CHALLENGE

The ProblemThe anthropogenic GHG emissions are causing an unprecedented rapid temperature increase overlaying the non-anthropogenic variations which poses serious threats to our climate.

The ChallengeTo prevent dangerous and irreversible climate changes, the GHG emissions must be reduced to limit the global temperature increase, preferably according to stabilisation level I giving a temperature increase of 2.0 to 2,4º C above the pre-industrial level. To achieve this, CO2 emissions must be reduced by 50 to 85 % by 2050 relative to 2000.

GREENHOUSE GASESCOVERED BY THE KYOTO PROTOCOL

GAS LIFETIME

GWP FRACTION %

20 YRS 100 YRS GLOBAL NORWAY

CO2Carbon dioxide 1 1 76,7 79,5

CH4Methane 12 72 25 14,3

N2O Nitrous oxide 114 310 298 7,9

SF6Sulphur hexafluoride 3200 16300 22800

1,1HFCs Hydrofluorocarbons

PFCs Perfluorocarbons

MARINE BUNKER CONSUMPTIONAND

EMISSIONS FROM SHIPPING

PAST, PRESENT AND FUTURE

MARINE BUNKER SALES & CONSUMPTION

0

50

100

150

200

250

300

350

400

450

500

mill

ion

tonn

e

Eyring et. al

DNV Fuel Sales

DNV Fleet Basis

IMO Scientif ic Group

IMO

CO2-EMISSIONS FROM SHIPPING

IMO study published in 2000: 1996: Fuel consumption 138 Mton (based on bunker sales)

CO2-emissions 437 MtonRepresenting 1,8 % of global CO2-emissions

Recent estimates for 2004:Fuel consumption 250 – 300 Mton (based on bunker sales)CO2-emissions 790 – 950 MtonRepresenting 2,7 – 3,2 % of global CO2-emissions or 1,6 – 1,9 % of global GHG-emissions

IMO Scientific Group: 2007(estimate) 2020 (prognosis: 2,1% pa)

Fuel consumption: 369 Mton 486 Mton (ship basis)

GHG-EMISSIONS FROM TRANSPORT14% of global GHG-emissions

Road Transport76 %

Other/Railway2 %

Shipping10 %

Aviation12 %

Source: Stern Review of the Economics of Climate Change, Oct 2006

(Carry 90% of world trade)

CO2-EFFICIENCY OF SHIPPINGAND

THE REDUCTION POTENTIAL

CO2-EFFICIENCY OF TRANSPORT MODES540

5021

8 3-5

95

195

295

395

495

Air freight 747-4001,200 km flight

Heavy truck w . trailer Cargo ship 2,000-8,000 Dw t

Container ship 6,600TEU

Bulk carrier 80,000Dw t

C0

2 g

/t/K

m

Source: Swedish Network for Transport and the Environment and Danish Shipowners’ Association

CO2-EFFICIENCY OF TRANSPORT MODESCO2 emissions from different modes of transport

0100200300400500600700800

Cargoaircraft

Heavy dutyvehicle

Freight train(Diesel)

InlandWaterway:

Barge

Cargo andcargo/pax

ships

Mode of transport

g C

O2 /

t-k

m

Serie1

Source: Presentation by Transporti e Territorio (TRT) at EP-conference in Brussel in June 2007

673

91 38 31 av. 17

REDUCTION POSSIBILITIES

Technical measures (eg. hull design, propulsion system, engines, etc.) Operational measures (eg. cargo utilization, speed, routing, etc.)

Cost of fuel has been the main driving mechanism for developing and implementing more energy-efficient and thus CO2-efficient technical and operational measures.

There is still a considerable potential for more CO2-efficient measures, but these are generally not cost-effective with the present fuel cost.

EXAMPLE OF IMPROVEMENTSFOC of marine 2-stroke engines

Historical data - general average values

140

160

180

200

220

240

260

1900 1920 1940 1960 1980 2000 2020

Year

Sp

ec

ific

oil

co

ns

um

pti

on

(gra

m/k

W/h

ou

r)

NOx regulation

2000

Oil crisis 1973

Source: MAN Diesel

EXAMPLE OF IMPROVEMENTContainer transportation

Energy consumption for transport of loaded containers from the Far East to Europe:

1970 200 g/TEU nm (diesel engine)

1976 196 g/TEU nm (steam turbine)

1980 120 g/TEU nm (diesel engine)

1983 110 g/TEU nm

1988 70 g/TEU nm

1996 50 g/TEU nm

2007 25 g/TEU nm ? (subject average weight)

75% reduction during 26 years up to 1996, corresponding to an average annual reduction rate of 5,4%.

THE REGULATORY PROCESSINTERNATIONAL AND REGIONAL

THE INTERNATIONAL PROCESS

Despite the low CO2-footprint of sea transportation relative to other transport modes, also international

shipping need to be covered by some control mechanism as agreed in Article 2.2 of the Kyoto-

protocol, not least because of the projected growth in sea transportation

KYOTO PROTOCOL

Kyoto Protocol adopted on 11 December 1997.

Article 2.2:

The Parties included in Annex I shall pursue limitation or reduction of emissions of greenhouse gases not controlled by the Montreal Protocol from aviation and marine bunker fuel, working through the International Civil Aviation Organization and the International Maritime Organization, respectively.

THE IMO-PROCESS SO FAR

Sept. 1997 A resolution is adopted requesting IMO to consider reduction strategies

March 2000 IMO study of GHG-emissions published

Dec. 2003 IMOs Assembly adopts policies for further work

July 2005 Guidelines for CO2-indexing adopted by MEPC 53

Oct. 2006 MEPC 55 decides to carry out a new in-depth study

July 2007 MEPC 56 establish a CG to discuss possible measures to address GHG-emissions

POSSIBLE REGULATORY MEASURESto limit or minimize the CO2-emissions

Direct measures (standards) Technical requirements (prescribed technical solutions)

Operational requirements (prescribed operational parameters)

Performance requirements (prescribed CO2-index/benchmark) - Design index (based on fixed design parameters)

- Operational index (based on actual performance – IMO-index)

Indirect measures

Different types of market-based measures providing economic incentives to minimize the CO2-emissions.

MARKET-BASED MEASURES

– Include in an emission trading system (open or closed, regional or global, different allocation methods)

– Paying a fee or charge for CO2-emissions (could be linked to the fuel purchase)

– Differentiation or incentive systems representing carrots or sticks depending on a ship’s design or operational performance

– Allocation of emission from ships to states (possible indirect measure) (for example to import countries – effect depends on the measures adopted by the countries and could thus differ from country to country)

KEY REQUIREMENTS TO CO2-REGULATIONS

Flag neutral- to ensure level playing field between ships of different flags

Goal based- to provide incentives to develop and implement the most cost-efficient CO2-reduction for each individual ship

No separate cap- to allow for growth in international shipping in order to meet the projected increase in demand for seaborne transportation

THE EU POSITION

EU - POSSIBLE CLIMATE POLICIES FOR MARITIME TRANSPORT (CE DELFT)

Voluntary commitmentsReporting of IMO CO2 indexRequirement to meet a given CO2 index limit valueInclusion of refrigerant gases in the CO2 indexMandatory differentiation of port duesInclusion of maritime transport in EU ETS (ref. aviation)Allocation of ship emissions to member states

(7 options depending on flag state, geographical area, bunker sales, export/import country)

EU PROSPECTS

If IMO is unable to agree a control mechanism by MEPC 59 in July 2009, EU has threatened to adopt regional measures, and the most likely measure is to include international shipping entering EU ports in the EU Emission Trading System as soon as possible after 2012.

SUMMARY AND RECOMMENDATIONS

Sea transportation is the most energy-efficient mode of transport Energy-efficiency can be further improved by implementing existing measures, provided economic incentives or regulatory requirements Emissions from shipping should and will be regulated Regulations must inter alia be flag neutral Cost of CO2-emissions will increase in the future, partly because of increased fuel price and partly because of future regulatory measures. This will stimulated the development of new cost-efficient measures for further reduction of CO2-emissions from ships

The shipping industry should take active part in the regulatory process to promote a practical and fair IMO-agreement by 2009, acceptable to EU. The maritime industry should work together to develop technical and operational options to reduce the CO2-footprint (CO2-index) of shipping.

ADDITIONAL BACKGROUND INFORMATION

GROWTH IN WORLD TRADEFigures in billion tonne-miles

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Source: Fearnleys Review 2006

billi

on

Average annual increase 1996-2005: 3,8 %

GROWTH IN WORLD TRADEFigures in million tonnes

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Source: Fearnleys Review 2006

mill

ion

Average annual increase 1996-2005: 3,4 %

WORLD MERCHANT FLEETShips of 100 GT and above

0

100

200

300

400

500

600

700

800

900

1000

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Source: Lloyd's Register of Shipping, World f leet statistics, LR/Fairplay

mil

lio

n g

t

Average annual increase 1996-2005: 2,5 %

GROWTH IN WORLD SEABORNE TRADE AND MERCHANT FLEET (index based)

0

25

50

75

100

125

150

175

200

225

250

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Source: Lloyd's Register of Shipping, World fleet statistics, LR/Fairplay - Fearnleys Review 2006

ships tonnes tonne-miles3,8 % p.a.

3,4 % p.a.

2,5 % p.a.

IMO-PROCESS (1)

26.09.1997.

Annex VI to MARPOL is adopted at a Diplomatic Conference, covering most emissions to air except CO2. However, Resolution 8 request the Organization inter alia:

a) to study the CO2 -emissions from shipping for the purpose of establishing the amount and relative percentage of CO2 emissions from ships as part of the global inventory of CO2 emissions, and

b) to consider what CO2 reduction strategies may be feasible in light of the relationship between CO2 and other atmospheric and marine pollutants, especially NOx since NOx emissions may exhibit an inverse relationship to CO2 reduction.

IMO-PROCESS (2)

March 2000.

The IMO Study of Greenhouse Gas Emissions from Ships, carried out by a consortium involving MARINTEK, DNV, ECON and Carnegie Mellon, was published and discussed at MEPC 45 in October 2000, ref. document MEPC 45/8.

CO2 emissions from international shipping was estimated to account for about 1,8 % of the global CO2 emissions in 1996, based on marine bunker sales amounting to 138 Mton.

The reduction potential of technical and operational measures was estimated. Also the feasibility and effectiveness of different market based mechanisms were assessed.

IMO-PROCESS (3)

05.12.2003.

IMOs Assembly adopts “IMO policies and practices related to the reduction of greenhouse gas emissions from ships” (Resolution A.963(23)). The key element is:

Urging MEPC to identify and develop mechanisms needed to limit or reduce GHG emissions from international shipping, giving priority to:- the establishment of a GHG baseline- the development of a GHG emission index focusing on CO2- the development of guidelines on the practical application of the GHG index, and- the evaluation of technical, operational and market-based solutions

IMO-PROCESS (4)

22.07.2005

MEPC 53 adopts “Interim Guidelines for Voluntary Ship CO2 Emission Indexing for Use in trials” (MEPC/Circ.471).

The CO2 index expresses the actual CO2 emissions per unit of transport work and is thus an operational performance parameter that can only be determined for a given period in retrospect.

The industry is urged to calculate the index in order for MEPC to assess the feasibility of the index at a future meeting of MEPC.

IMO-PROCESS (5)

October 2006

MEPC 55 decides to carry out a new in-depth analysis of the GHG emissions from international shipping by 2010 in order to establish a more accurate baseline as requested in the policy document, resolution A.963(23).

It also decides to continue the trials with the CO2-index and evaluate the results at MEPC 58 in October 2008, including a possible revision of the guidelines.

IMO-PROCESS (6)

July 2007

MEPC 56 discusses possible technical, operational and market-based mechanism to limit or reduce the GHG emissions from international shipping as requested by the policy document.

Considering the need for more input, a correspondence group is established to discuss possible approaches on technical, operational and market-based measures to address GHG emissions from ships and to submit a written report to MEPC 57 in March/April 2008.

OPERATIONAL CO2-INDICES (THEORETICAL)

Some typical Vessel types and sizes per vessel segment

Average dwt

Average sailing

distance

Vessel speed

Cargo voyages

Repositioning

voyages

Cargo capacity utilisation

when loaded

Total engine

size [kW]

Annual bunker consumption

per vessel [tonn]

Bunker consumption in gram per tonn-

nm

Carbon Footprint in gram Co2 per tonn km

Dry bulk Capesize 100'-> 164 306 7 500 13 6 5 90 % 15 000 17 457 2,71 4,71 Dry Bulk Panamax 55'-80' 70 148 5 500 12 8 4,5 90 % 9 000 9 498 3,58 6,23 Dry Bulk Handymax 45'-55' 48 672 5 000 12 9 5 90 % 8 000 8 603 4,52 7,86 Dry Bulk Handymin 10'-30' 22 686 2 500 12 17 8 85 % 5 000 5 009 6,60 11,48 Dry Bulk vessels 0-10' 3 814 1 000 12 40 20 85 % 2 000 1 860 21,88 38,06 Reefer vessel 10'-15000 dwt 11 572 3 000 19 18 14 80 % 11 000 10 361 23,98 41,71 Reefer vessel 5'-10000 dwt 7 199 2 000 17 24 18 70 % 6 500 6 062 30,07 52,30 Container 8000 TEU, 85' -> 98 956 11 000 24 13 0 70 % 68 000 76 112 9,62 16,74 Container 4000 TEU, 40'-65' 51 119 7 000 24 17 0 70 % 42 000 39 627 11,60 20,18 Container 1100 TEU, 15'-25' 13 762 1 000 18 50 0 70 % 8 500 4 951 14,15 24,60 All other containers, 0-5' 3 307 500 17 100 0 70 % 4 000 2 298 28,54 49,64 Crude oil tanker 200-+ 302 560 9 000 14 4,5 4,5 95 % 23 000 24 493 2,20 3,82 Crude oil tanker 120-199,9' 155 210 5 500 14 7 7 90 % 12 000 12 105 2,34 4,08 Crude oil tanker 75-119,9' 97 601 2 000 14 13 13 90 % 12 000 8 287 3,77 6,55 Product, chemical 50'-++ 76 256 5 000 14 10 3 85 % 12 000 10 806 3,53 6,14 Product, chemical 27'-38' 34 905 2 500 14 14 4 80 % 9 000 5 978 6,28 10,92 Product, chemical 10'-27' 16 243 2 000 14 35 15 80 % 7 500 10 529 12,53 21,80 Product, chemical 0-10' 3 425 500 14 33 17 80 % 3 000 1 098 27,73 48,22 RoRo 30'-++ 40 729 8 500 19 13 0 70 % 19 000 20 713 7,24 12,59 RoRo 20'-30000 23 467 3 000 19 25 0 70 % 14 500 10 955 10,43 18,15 RoRo 10'-15000 12 616 2 000 19 40 0 70 % 10 000 7 975 12,95 22,52 RoRo 0-5000 2 742 1 000 15 99 0 70 % 3 000 3 671 26,49 46,06 LNG 60'+ 71 867 5 000 20 10 10 95 % 25 500 23 990 7,43 12,92 LPG 50'++ 55 249 4 000 16 12 11 80 % 14 500 15 550 7,79 13,54 LPG 10'-20' 9 745 1 000 15 25 24 80 % 5 000 3 143 17,46 30,36

Source: Lindstad & Uthaug, Lloyd's Fairplay 2004